"Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas

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Mon, January 23, 2023 at 3:28 AM CST

European Gas Declines as Strong Reserves Counter Icy Weather

(Bloomberg) -- European natural gas fell as an icy blast was forecast to ease next week, while high stockpiles helped the region guard against any supply disruptions.

Benchmark futures fell as much as 4.3%, giving up an earlier increase. Gas demand could rise over the next few days as a wave of cold temperatures is expected to persist in northwest Europe for most of this week. Temperatures are likely to rebound to above seasonal norms next week, forecaster Maxar Technologies Inc. said.

The ongoing frigid weather has brought back some demand after a prolonged period of unusual warmth has gas storage sites about 78% full compared with the five-year average of 58% for the time of year. The reserves have kept Europe on track to ride out this winter without any major disruptions, and pushed gas prices to about half the levels of what they were during the previous cold snap in early December.

The stockpiles are helping counter the lowest Norwegian supplies in more than two months. Available capacity at several facilities in Europe’s biggest gas provider has been reduced by works and orders for shipments have fallen. High imports of liquefied natural gas are also helping ease concerns.

Wind power potential is seen also high for Germany and Italy next week, reducing the need for gas to generate power.

“Thanks to more comfortable wind generation, the increase in gas demand for power generation should be more moderate compared to early December,” EnergyScan, the analysis platform of Engie SA, said in a note. That would allow the European gas system to absorb the rise in residential demand “without too much tension.”

Russian pipeline gas transit via Ukraine declined last week and nominations suggest flows will remain curbed on Monday, though some analysts suggest this may be due to lower demand from buyers rather than supply issues.

Dutch front-month futures, the European benchmark, were 1.6% lower at €65.80 a megawatt-hour by 10:25 a.m. in Amsterdam. They increased 10% on Friday for the first weekly gain after five straight periods of declines. The UK equivalent contract fell 1.4% on Monday.


US natural gas futures rose more than 9% toward $3.5/MMBtu on Monday, recovering from their lowest level since June 2021 of $3.1 touched last week, in anticipation of higher heating demand due to cold spell forecasts. Still, soaring domestic production and high storage levels capped further gains. US natural gas production is likely to grow more than 2% this year to a record daily average of 100.3 billion cubic feet, the Energy Information Administration said. At the same time, EIA data showed that utilities unexpectedly injected 11 bcf into storage in the week ending January 13th. Meanwhile, investors continue to monitor the situation at the Freeport LNG export plant in Texas, which was expected to restart operation in the second half of the month, even though it was still pending regulatory approvals.

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Natural Gas Prices Jump 10% In Early Trading

By Irina Slav - Jan 23, 2023, 7:42 AM CST

  • Natural gas prices jumped by 10 percent in early trading.
  • The jump comes after a substantial drop over the past month.
  • Inflation continues to be a problem for the gas industry, especially in the production growth aspect.

Natural gas prices have started the week with a gain of over 10 percent, but the recent trends in the price have concerned some in the U.S. gas industry.

Last week, prices shed 7.17 percent, extending a streak of weekly losses that began in the middle of last December. Some have suggested prices could slump to less than $2 per million British thermal units 

Over the past four weeks, natural gas prices lost some 50 percent—a substantial and sharp plunge that prompted Chesapeake’s chief executive to suggest supply growth might have to be moderated 

In a recent interview with Bloomberg, Nick Dell’Osso said that “Growth in gas supply is not needed in the short term. We do think the industry should acknowledge that and may reduce growth in the near term.”

In this, Dell’Osso echoed an earlier statement by the chief executive of EQT, who said earlier this month that forecasts of a production increase this year in the U.S., to the tune of 3 billion cu ft daily, may fail to pan out.

“That’s a little ambitious with the current pullback and prices,” Toby Rice told Bloomberg in an interview. “You are going to see an operator response and slow down in the activity levels.”

Last year, demand for LNG from Europe stimulated gas production growth, but now that Europe’s storage caverns are full and winter is mild, demand is slacking off, as is domestic demand, again thanks to the mild weather.

Inflation, meanwhile, continues to be a problem for the gas industry, especially in the production growth aspect.

“Inflation has not reacted,” Rice told Bloomberg. “So, we’ve got a couple big forces that are working against producers.” In addition, the EQT executive said, there is a shortage of pipelines that further discourages substantial production growth.

“We still see pockets in the US where natural gas prices are higher than what they’re paying in Europe. It’s crazy,” Rice said.

By Irina Slav for

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UPDATE 3-Freeport LNG says Texas plant repairs completed, seeks to restart some operations

Mon, January 23, 2023 at 1:25 PM CST

By Scott DiSavino

Jan 23 (Reuters) - Freeport LNG, the second-largest U.S. liquefied natural gas exporter, on Monday said it had completed repairs to its Texas plant and asked U.S. regulators for permission to take early steps to restart the fire-idled facility.

The closely-held liquified natural gas (LNG) company's export facility was knocked offline by a fiery blast on June 8 and barred from resuming production until federal regulators completed an extensive safety review and approved resulting changes.

Freeport LNG sought permission to begin introducing LNG into the plant's piping system, according to a filing released on Monday with the U.S Federal Energy Regulatory Commission (FERC). "Subsequent approvals would be necessary" to fully return the liquefaction trains to service, it wrote.

A spokesperson confirmed the request but declined further comment.

U.S. natural gas futures jumped as much as 9% to $3.46 per million British thermal units, adding to an earlier gain on forecasts for colder weather. On Friday, futures closed at the lowest price since June, 2021.

The facility draws around 2.1 billion cubic feet per day (bcfd) of gas when operating at full power.

"The Freeport news explains the late price rally. In this business, folks buy first and ask questions later," said John Kilduff, a partner at Again Capital LLC in New York.

The company sought approval "to commence cool down of its Loop 1 transfer piping and reinstate the facility's boil off gas management compressors and associated piping," the filing said.

The procedure, which would take about 11 days, would be a first step to returning the 15-million-tonne-per-year export facility to normal operations after a seven-month outage. Freeport asked for a response to its request by Jan. 24.

An approval would allow the "introduction of LNG into the piping systems to allow the piping to cool down to cryogenic temperatures necessary for circulation of LNG within the Loop 1 piping system and to transfer LNG to Dock 1 of the export facility," Freeport said.

The outage forced big customers including JERA and Osaka Gas to book hundreds of millions of dollars of losses. Its other big offtakers include BP, TotalEnergies and SK E&S. (Reporting by Scott DiSavino in New York; Editing by Nick Zieminski, Paul Simao and Bill Berkrot)


REUTERS - Details of NatGas - Mon, January 23, 2023 at 2:51 PM CST

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pdf download of Freeport LNG -

Freeport LNG Development, L.P., et al. submits request for authorization to cool down the Loop 1 LNG transfer piping and reinstate boil off gas (BOG) management for the FreePort LNG Termianl Project, et al. under CP03-75, et al.

See 2 page letter to FERC Federal Energy Regulatory Commission

US NatGas Prices Soar After Freeport "Completed Repairs" Of Damaged Terminal, Aims For Partial Restart

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by Tyler Durden
Monday, Jan 23, 2023 - 04:20 PM

US natural gas futures jumped late in the session after news hit that Freeport LNG, a major liquefied natural gas export terminal on the Texas coast which has been closed since an explosion last summer, said repairs to the terminal are complete and is seeking approval for restart. 

Freeport wrote a letter to the Federal Energy Regulatory Commission (FERC) requesting permission to restart the terminal that accounts for about 15% of all US LNG exports. 


Pursuant to your letter dated June 30, 2022, Freeport LNG Development, LP ("Freeport") must obtain written approval from FERC before restarting any non-emergency operations in existing facilities, constructing new or modified facilities, and commissioning and placing any facilities back into service.

As further described herein, Freeport has completed repairs to the Export Facility on Quintana Island, Texas, performed safety reviews, revised various procedures, implemented new safety systems and performed necessary training in order to safely begin to resume initial operations at its Export Facility.

NatGas surged 9% to $3.45 per million British thermal units. 


NatGas prices will need to hold the 76.4% Fibonacci retracement level ($3.41) if further upside is to be achieved. 


In recent weeks, we've pointed out Freeport flows were indications the plant was nearing a restart:

However, Houston-based energy firm Criterion Research had this to say:

Criterion's weekly analysis of progress at Freeport LNG indicated that repair work was still taking place as of last week, so it's unclear what Freeport means when it cited that they have "completed repairs." We don't believe feed gas will be flowing in January, and February still seems to be an optimistic time frame for strong nominations. Based on prior announcements, once they get the green light to restart, Freeport's timeline pinned down a ramp from zero to 2 Bcf/d over an approximately two-month period.

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Freeport LNG Files For Restart, Awaits Regulatory Response

By Charles Kennedy - Jan 23, 2023, 5:30 PM CST

Freeport LNG on Monday

confirmed for that repairs had been completed at its liquefied natural gas export facility, which has been offline since June, and that a request to restart by introducing LNG to the piping system had been filed with regulators.

In the regulatory filing, Freeport LNG asked regulators for a response to their restart request by Tuesday. 

The Texas-based Freeport LNG export terminal has been offline since a June explosion and subsequent fire. 

Rystad Energy is speculating that Freeport LNG will not be able to restart until March.

In a statement to Rigzone last week, Rystad Energy Vice President Emily McClain, said “Freeport LNG’s restart will support U.S. LNG exports this year, but the timing remains uncertain”. With regard to a “full ramp-up”, McClain said it was not expected until “mid-year”. 

Speculation, however, remains just that, with Freeport LNG sticking to its original timetable. 

On January 11, Freeport LNG told that there was “no change to our restart timeline. We are still targeting the second half of this month for the safe, initial restart of our liquefaction facility, pending regulatory approvals.”

Freeport, responsible for some 20% of total LNG exports from the United States and generating $35 billion in revenue during the first nine months of 2022, served Europe well last year as the continent looked to squelch a growing energy crisis this winter.

The pending restart comes as natural gas prices rebounded slightly on Monday with a 10% jump, but only after shedding over 7% last week and over 50% over the past four weeks, prompting the CEO of Chesapeake to warn that the industry may have to moderate supply growth.

Demand for natural gas is declining from its peak last year, prompted by Europe. However, with European storage full and winter proving much milder than anticipated, demand is dragging. 

By Charles Kennedy for

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Tuesday late morning Janary 24, 2023

(Adds latest prices) Jan 24 (Reuters) - U.S. natural gas futures dropped about 6% on Tuesday on uncertainty about when Freeport LNG's liquefied natural gas (LNG) export plant in Texas would restart and on forecasts for milder weather and lower heating demand over the next two weeks than previously expected.

Although Freeport LNG said that its export plant was ready to begin restarting, analysts said it will still take time for the facility to exit its seven-month outage and start pulling significant gas from the nation's pipelines.

Freeport LNG, the second-largest U.S. LNG exporter, said on Monday that it had completed repairs to its plant and asked U.S. regulators for permission to take early steps to restart the fire-idled facility. Those steps involve cooling certain pipes - a process Freeport said would take around 11 days - after regulators' approval. After that, Freeport said it would seek permission to start the liquefaction trains that turn gas into LNG.

Freeport's request meets the company's last estimate in December that the plant would be commence restart activities in the second half of January, pending regulatory approvals. That would also put it on track to meet some sources' forecast for production to restart in February or later. After a series of delays by the company from October to January, analysts have said Freeport might need until the second quarter to resume due to the large amount of work needed to satisfy federal regulators.

Freeport is important because the market expects gas prices and demand to rise once large amounts of pipeline gas start flowing to the plant. The facility, which shut in a fire on June 8, 2022, can turn about 2.1 billion cubic feet per day (bcfd) of natural gas when operating at full power. That is about 2% of U.S. daily natural gas production.

The latest weather forecast projected on Tuesday that there would be 380 heating degree days over the next two weeks, which was down from the 390 HDDs in Monday's outlook. HDDs, used to estimate demand to heat homes and businesses, measure the number of degrees a day's average temperature is below 65 degrees Fahrenheit (18 degrees Celsius).

Front-month gas futures for February delivery fell 18.9 cents, or 5.5%, to settle at $3.258 per million British thermal units (mmBtu), their lowest since closing at a 19-month low of $3.174 on Friday, Jan. 20.

U.S. GAS OUTPUT Data provider Refinitiv said that average gas output in the U.S. Lower 48 states has risen to 98.7 bcfd so far in January, up from 96.7 bcfd in December. That compares with a monthly record of 99.9 bcfd in November 2022.

On a daily basis, however, output was on track to drop about 1.7 bcfd to a preliminary three-week low of 97.4 bcfd on Tuesday as cold weather starts to cause wells to freeze - known as freeze-offs in the energy industry - in some producing basins like the Bakken in North Dakota, the Rockies in Colorado, the Permian in Texas and Appalachia in Pennsylvania.

With colder weather coming, Refinitiv forecast U.S. gas demand, including exports, would jump from 130.1 bcfd this week to 139.0 bcfd next week. Those forecasts were lower than Refinitiv's outlook on Monday.

Week ended Week ended Year ago Five-year Jan 20 Jan 13 Jan 20 average (Forecast) (Actual) Jan 20 U.S. weekly natgas storage change (bcf): -78 +82 -217 -185 U.S. total natgas in storage (bcf): 2,742 2,820 2,622 2,601 U.S. total storage versus 5-year average +5.4% +1.2% Global Gas Benchmark Futures ($ per mmBtu) Current Day Prior Day This Month Prior Year Five Year Last Year Average Average 2022 (2018-2022) Henry Hub 3.59 3.45 4.26 6.54 3.60 Title Transfer Facility (TTF) 19.00 21.31 28.25 40.50 14.39 Japan Korea Marker (JKM) 23.26 22.82 28.53 34.11 14.31 Refinitiv Heating (HDD), Cooling (CDD) and Total (TDD) Degree Days Two-Week Total Forecast Current Day Prior Day Prior Year 10-Year 30-Year Norm Norm U.S. GFS HDDs 480 490 508 430 435 U.S. GFS CDDs 3 3 2 4 3 U.S. GFS TDDs 483 493 510 434 438

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Sub-Zero Temperatures Set To Boost LNG Demand In Asia

By Charles Kennedy - Jan 24, 2023, 8:00 AM CST

  • Freezing weather is sweeping across northern and eastern Asia.
  • The sub-zero temperatures have already led to a 33% spike in coal consumption.
  • LNG demand is expected to rise in the region, adding more competition to the already-tight market.

A wave of freezing weather is sweeping across Asia and will likely boost energy demand on the continent as the thermometer plunges deep below zero.

Per Bloomberg, northern China saw temperatures of a record -53 degrees Celsius, equal to -64 F, and Seoul saw temperatures drop to -16 Celsius this week. The cold snap is forecast to remain in place until the end of the month.

 In Mohe, northern China, where the record low temperature was measured, coal consumption has already increased by some 33 percent as utilities ramp up boiler activity to cope with the surge in demand for heating, Bloomberg noted.

Yet the overall effect of the weather may not be particularly significant, at least in China, where businesses are closed for the Lunar New Year holiday. 

China, South Korea, and Japan—the three countries expected to bear the brunt of the cold snap—are all leaders in energy imports, with demand strongly exceeding domestic supply, especially in Japan’s case.

All three are among the leading importers of LNG, which has been tight recently as Europe rushed to stock up on gas after sanctions following Russia’s invasion of Ukraine prompted an in-kind response from Moscow and reduced gas flows.

“LNG procurement competition has been intensifying and thus, stable procurement of fuel in a timely manner in line with the domestic electricity supply-demand situation is needed to secure a stable supply of energy in Japan,” JERA, the country’s biggest LNG importer, in comments on a recent supply deal with Oman.

China, meanwhile, has been betting on long-term commitments and has come to account for as much as 40 percent of all long-term LNG contracts, Nikkei Asia reported today.

South Korea, the world’s third-largest LNG importer after Japan and China, could also need to step up its purchases amid the cold spell after a mild winter that brought down demand earlier this year.

By Charles Kennedy for

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Arctic Air Intrusions Coming To Lower 48 Next Week

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by Tyler Durden
Wednesday, Jan 25, 2023 - 06:20 PM

Progressive Farmer Meteorologist John Baranick penned a note this week, making a case for the return of winter for a large swath of the Lower 48 -- something we've pointed out in recent weeks -- recall, Siberia Records Minus-80 Degrees As Talk Of Polar Vortex Grows

The year started with above-average temperatures for much of the Lower 48. Now Baranick forecasts a major shift in the weather for the Canadian Prairies, Northern and Central Plains, and Upper Midwest. 

"These areas will have the longest duration of low temperatures from the upcoming event that is forecast to last about two weeks, or into mid-February," he said. 

Other parts of the country will see varying temperatures with the West, Southern Plains, rest of the Midwest, and Northeast more likely to see cold than warm, and the Southeast to see more warm than cold during the same time frame.

Temperatures in the northwestern Corn Belt and Canadian Prairies will be 10 to 20 degrees Fahrenheit below normal on average during that two-week period while some bursts of arctic air will make those even colder. Warmth in the Southeast will resist the deeper penetration of the arctic air.

Baranick noted:

The setup of very low temperatures in the northwest and warm conditions in the Southeast will fuel an active storm period. The initial front itself will be setup by a clipper system moving through southern Canada Jan. 26-28.

That front will be continually pushed southward by a couple of storm systems forming along that front, with the colder air reaching down to Texas and the Ohio River by Jan. 29. Another push should bring that cold air deeper early to middle of next week, but the far Southeast, near the Gulf and Atlantic Coasts, are likely to be spared the colder temperatures until late next week.

Baranick's forecast aligns with the Climate Prediction Center's latest 8-14 day outlook for Feb. 1-7. 


The latest run of the Global Ensemble Forecast System model shows arctic air should begin pouring into the Midwest this weekend. 


"The incoming cold will send energy demand up, and how often that reaches the more populated areas of the country in the east and south will determine how much demand increases. Natural gas prices have taken a dive recently due to a very warm January. But they are likely to go up," Baranick explained. 

However, NatGas futures dropped to a 19-month low on Wednesday despite long-term weather models forecasting colder weather for the Lower 48. 


 Baranick asked this question:

When does the cold recede? Models disagree on timing, but a building ridge of high pressure in the Southeast may be able to push back the cold more to the western portions of the U.S. and Canada to bring some relief around mid-February.

And he added: "So, buckle up, the reign of winter is back upon us and will have some staying power."

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One company’s waste could soon become the public’s renewable gasoline supply if a Houston-based company succeeds in its growth strategy.

Verde Clean Fuels was recently born of the combination of CENAQ Energy and Bluescape Clean Fuels Intermediate Holdings. Ernie Miller, co-founder and chief executive officer, explained that the name “Verde Clean Fuels” was chosen as the name for the new publicly traded entity to cause less confusion between ‘Bluescape Energy Partners’ and ‘Bluescape Clean Fuels.’

With the new public company up and running and armed with a $20 million equity investment from Diamondback Energy, Verde is focusing on spreading its proprietary syngas-to-gasoline (STG+) technology that can produce renewable gasoline from feedstocks – or in the case of the Permian Basin, natural gas that would otherwise be flared or is otherwise disadvantaged.

Speaking with the Reporter-Telegram by telephone, Miller said a benefit of his company’s process is its smaller footprint. In the case of the Permian Basin, he said the company’s units can be deployed where the feedstock is produced.

Verde and Diamondback have entered into an Equity Participation Right Agreement that in which Diamondback can participate and jointly develop facilities in the Permian Basin that utilize Verde’s STG+ technology to produce renewable gasoline. This allows Diamondback to mitigate its flaring while producing a high-margin product from its natural gas that would otherwise be flared or stranded.

“Diamondback is excited to announce our equity investment in and partnership with Verde, which is our largest investment to date out of our new ventures subsidiary, Cottonmouth Ventures,” Kaes Van’t Hof, president of Diamondback, said in a statement. “We are also looking forward to expanding the Verde business into the Permian Basin with their proprietary STG+ technology. This investment, and the technology that accompanies it, fits with our strategy to decarbonize the oil field while generating an economic return for our investors.”

Miller said it is too early in the process of developing a strategy with Diamondback, but he expects it will be a handful of Verde’s facilities strategically placed among Diamondback’s production sites rather than a centralized facility. He said he expects the plants would have a capacity of about 3,000 barrels a day of renewable gasoline.

Verde’s technology produces a renewable gasoline from various waste feedstocks – biomass outside the Permian – that can result in a more than 60% reduction in carbon intensity over traditional hydrocarbon-based gasolines. The process has been proven at facilities across the country, with Verde’s first commercialized facility expected to open in Maricopa, Arizona, in 2025. The Maricopa facility is expected to produce 7 million gallons per year in its first phase.

“Our product is already graded gasoline consumed everywhere,” explained Miller. “We’ll become a niche provider of gasoline into the larger market.”

He said Verde’s primary customers will be what are known as obligated parties, producers or importers of liquid fuels who must blend a certain amount of renewable fuels into their gasolines.

The company estimates replacing conventional gasolines with Verde’s renewable gasoline would be comparable to removing six of every 10 cars on the road today.

Even assuming the most aggressive penetration of electric vehicles, miles driven are expected to rise.

“Even when you make the most aggressive assumption for electric vehicles, say by 2035 electric vehicles have 25% market penetration, projections show total mils driven will rise by 20%,” Miller said. “The result is the gasoline demand curve will be at least flat, perhaps even increase. That means carbon emissions for 2035 (from vehicles) will be equal to emissions today. The only way to address that is through gasoline.”

He sees similar opportunities for Verde in the natural gas-rich Marcellus play, where he said the natural gas is truly stranded because of a lack of pipelines to move the fuel, and the likelihood no more pipelines will be built in the region.


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